Huh I am not getting any email updates on this thread. Anyways, how are you supposed to remember the years to depreciate by for problems like:
On August 1, 2016, Graham purchased and placed into service an office building costing $264,000, including $30,000 for the land. What was Graham's MACRS deduction for the office building in 2016?
A.
$9,600
B.
$6,000
Incorrect C.
$3,600
D.
$2,250
ANSWER
Total cost $264,000
Less: Cost of land – 30,000
——–
Depreciable basis $234,000
of building ========
Commercial buildings placed in service after May 12, 1993, are depreciated over 39 years using straight-line depreciation and mid-month convention. While the depreciation is $6,000 per year, since it was placed in service in August, Graham can only take 4.5 months of depreciation in 2016. That is half the month of August (mid-month) and all of September, October, November, and December.
$234,000 / 39 years = $6,000 per year
4.5
$6,000 x —– months = $2,250
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